Going cashless: the buck stops here

In the wake of digitisation, expanding economies are hurtling at binary speed toward a fully cashless society.

Australia provides a good example. It is now recognised as a world leader in the push for a zero-cash economy.

A new MasterCard global survey reveals that Australia ranks in the top ten of nations dubbed 'nearly cashless'. It sits in sixth place, behind Belgium, France, Canada, UK and Sweden.

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Some 86% of all consumer payments nationwide are now made by card. In the US, the ratio is just 45%. Belgium's first place is based on a 93% rate of cashfree payments.

In the top-ranking nations, wave-and-pay card systems are now featuring in an increasing variety of service and retail environments, from supermarkets to railway stations. The 2012 London Olympics was perhaps the first global event to run most of its on-site retail services using such systems.

Cards, of course, represent just one potential medium for wave-and-pay. Arguably it is the smartphone, not the credit card, that may finally sound the death knell for coinage and paper money.

By hooking us on digital cash, cloud-connected, multi-faceted mobile phones make it possible for companies to build huge databases, which can be analysed to predict future consumer movements.

The consumer is, of course, complicit in this process. Moving digital currency about at the push of a button reduces our levels of what psychologists call 'time anxiety'. Gone are messy logistical problems such as finding time to visit a hole-in-the-wall machine; or working out which of our ten credit cards to use for a particular transaction.

For all their potential benefits, however, cashless systems also pose significant challenges. Instant gratification technology, digitisation, economic recession and the easy availability of credit have all conspired to make it easier for people to spend beyond their means.

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The convenience and weightlessness of digital money make it easier for people to spend more, with less forethought. One of cash's advantages is its physicality. Paper money and coins have substance and weight; we can easily see when we are running low on either one. Digital money, on the other hand, is nothing more than a series of 1s and 0s, working together in a way that few of us really understand.

Not having a physical unit to count and dispense disguises how cashed up we really are, making it easier for us to overspend and over-commit.

Personal debt is a fast-growing problem in much of the developed world. Figures from the Reserve Bank of Australia (RBA) suggest that Australians have more personal debt than people from any other country, including so-called bad debts - those that involve things we don't need or can't afford.